Accruals

Accruals are costs or revenues that are to be divided over multiple periods. Dividing these entries among the periods to which they relate ensures that the profit and loss account will provide a realistic view. For example, if you receive an annual invoice for the lease of your business premises, you can divide the costs over 12 periods of one month. Similarly, revenues generated from a three-year maintenance contract with a customer could be transferred over 36 periods.

Note: You can only divide costs and revenues that are posted to a profit and loss account.

Settings

To use accruals, configure the following settings:

• Define the ledger accounts to which you want to post accruals: open the Financial Settings tab, select Default Ledger Accounts, and then select an account in both the Debit Accruals field and the Credit Accruals field.
• On the Day Books tab, choose the day book you want to use for accruals. To be able to fill the day book, the following conditions must be true:
  • The Accruals day book cannot be blocked for manual posting.
  • The employees who will fill the day book pages need to have rights to use the day book. The rights to the day book can be assigned to the user group the employees belong to, or to individual users.

Posting accruals

1. To post costs or revenues, open the appropriate day book, and create a page and a day book line.
2. Select the day book line, and then click the Accruals button.
3. Fill in the data on the Accruals settings form, for example the periods to which the costs or revenues relate. Run the process.

For every period specified, a day book line is created and the posting is made. For the annual lease, 12 day book lines are created, and the lease excluding VAT is posted for every period. Any rounding differences are corrected in the last period.

Note: The period range specified can include periods from a subsequent fiscal year. If the next fiscal year has already been created, the periods will be posted immediately. If the next fiscal year does not yet exist, the postings will be made once it is created.

Viewing accruals

To retrieve details of accruals, perform the following steps:

• To view all accrual details, use the Column Chooser to add the relevant columns to the list of day book lines.
• Each accrual will be assigned a number. If you add the 'Accrual' column with that number to the Journal, you can sort the data by that column.
• If you also add the 'Accrual' column to Previous Years' Ledger Card, you can analyze accruals that relate to multiple fiscal years.

Example

On March 1, you receive the annual invoice for the lease of your business premises. You want to split this invoice into 12 periods, starting in March this year and running to February next year.

After you have entered the purchase invoice and created accruals, the following posting is created:

The journal entries for each period are created using the Accruals day book.

March

...

February next year